Finding the Right Property for Your Budget
“What can I afford?” This is one of the most significant – if not THE most significant – questions in property finance.
I show you how to break down this big question into small, manageable steps to bring you even closer to the answer. Property finance is like learning a new exercise: break it down into smaller parts and it becomes easier and clearer. You will soon realise it is far less complicated than it seems.
You may recognize these thoughts:
– Your rent has gone up again, and you’re wondering wether it’s finally time to buy your own home?
– You’ve had a baby and your flat feels too small – what would an extra room cost?
– City life is getting too much? You are dreaming of moving back to the countryside – your own house with a garden?
All these scenarios share the same question: “But can I afford it?”
The answer depends on two main factors: your monthly expenses and your available savings.
Acquisition Costs – Your Equity Requirement
When purchasing a property – whether for personal use or as an investment – it is important to consider the additional costs involved:
– property transfer tax: 3.5% to 6.5% depending on the federal state
– notary and land registry service fees: approx. 2%
– estate agent’s commission: usually around 3.57%
These acquisition costs are one-off expenses – typically between 5.5% and 12%, around 9% on average.
Important: These costs are not typically covered by banking institutions. They must be paid from your personal savings. Gifts from parents or grandparents are also accepted as equity.
But What Purchase Price is Realistic?
Property prices in Germany vary significantly between different regions. In Schleswig-Holstein, a family home may be found for 300,000 EUR; in Munich, the same amount might barely purchase a small flat.
Before we define your maximum purchase price, we need to understand the type of property you’re interested in and the location:
– City or countryside?
– How many rooms are required? What’s the optimum size for the garden?
– What’s the public transport connection like?
– How attractive is the area for singles, couples, or families??
All of these factors have a massive impact on the price.
A Simple Example.
Acquisition costs average around 9% – for the sake of this calculation, let’s round up to 10%.
For instance, if you have 25,000 EUR in savings and you know that you need to cover ~ 10% yourself, you can afford a property worth around 250,000 EUR.
And the monthly repayment?
Let´s assume a loan of 250,000 EUR with a total annual rate (interest and repayment) of 5.75%. This equates to a monthly payment of approx. 1,200 EUR (excluding utilities).
In addition there are running costs to consider, including water, heating, electricity, street cleaning, insurance, council tax, and a maintenance reserve. A realistic guideline to follow is to set the cost at 4.50 EUR per square metre of living space.
Income vs Expenses
To assess long-term affordability, we consider:
– Are you applying independently or together with a partner?
– Is your income stable or variable (e.g. shift bonuses)?
– Which amount is currently available at the end of the month?
– How much more would you be willing to spend on your new home?
– Are additional costs to be expected, such as commuting?
General rule:
It’ s recommended that your German mortgage payment should ideally not exceed 35-40% of your net income.
So, how much can I afford?
Let’s summarise:
– Equity: 25,000 EUR
– Purchase price: 250,000 EUR
– Loan amount: 250,000 EUR
– Monthly rate: approx. 1,200 EUR
– Net income: approx. 3,200 EUR
This is within the range of a realistic and healthy financing structure.
Please note that these figures are for illustrative purposes only. During a personal consultation, we will calculate exactly which monthly payment suits your lifestyle and help you reach your goals without restricting your finances.
CONCLUSION:
The question “What can I afford?” cannot be answered with a simple online calculator.
My clear structure, honest analysis, and professional guidance guarantee an answer that fits your life situation.
I assist you in determining your financial scope and structure your financing in a way that ensures your comfort – both today AND in the future.
BOOK YOUR PERSONAL CONSULTATION TODAY and find out what you can truly afford.eisten kannst.
